My Euro-Yuan Meme in the WSJ

One month ago, in “Superpower Smackdown – Germany vs. China” I wrote:

“Germany and China are economic superpowers because they have exchange-rate dominance. The Germans keep their European Union satellites enslaved via the euro. The Chinese have been transferring the USA’s industrial power to themselves via their yuan-dollar currency peg.”

And yesterday, this was in the headlines of the Wall Street Journal:

“The euro has punished Southern Europe the way China’s currency has hurt the United States.”

Here’s a picture (click to enlarge):

Nice, huh? What will be in the WSJ headlines a month from now? I don’t know; I haven’t decided yet (ha, ha).

Austan Goolsbee discussed Germany and Europe in his opinion piece, but I was disappointed that he didn’t say anything further about China. Nonetheless, I’m glad to see my meme taking root in the minds of economics professors. If enough of them come around, it will be easier for the politicians to finally do something about China.

The USA is an economic satellite of China, and likely to stay that way unless something is done soon.

Blatant Immigration Propaganda from CNN

While discussing the record-breaking level of immigration into the USA in my last post, I said that it was a deliberate campaign to beat down wages for American workers.

Maybe you thought that I was engaging in hyperbole?

Well, guess again.

Take a look at this specimen of corporate propaganda published by CNN (click picture to enlarge):

The statement:

“Ellis Island has put up a velvet rope line. To vital job generators, we are saying, “There’s no room for you.”

…is a direct contradiction of the official statistics published by the Department of Homeland Security. We are living in the highest-immigration period in American history.

Did this “journalist” and the fact-checkers and editors at this “news” organization even look at the stats? Clearly, not.

Now, I don’t mean to single out Wilkinson or even CNN. I just happened to come across this story shortly after I published the immigration charts. As a matter of fact, if you keep your eyes open, you will see this same “story” throughout the media – from left-wing CNN to right-wing CNBC. From Democrat Mort Zuckerman to Republicans Larry Kudlow and Donald Trump.

But what about the argument? Is it true that we need genius immigrants to come here and create jobs for all of us lazy, stupid, uneducated, unmotivated Americans? Clearly not. Over the last ten years, we have brought in 10.5 million legal immigrants, and during that time poverty has exploded across America. We have over 13 million people unemployed, and 45 million on food-stamps.

In other words, the “immigrants will save us” policy HAS ALREADY FAILED!

Rather spectacularly at that.

Immigration Armageddon

Does the USA have an unemployment problem? Or does it have an immigration problem? Did you know that during the Great Recession we brought in record numbers of immigrants? Take a look at this chart (click to enlarge):

USA Immigration by Decade

That’s right. Even when the unemployment rate went over 11% in 2009, immigration kept on going full steam ahead. The 10-year moving average stands at an all time high, as you can see on this chart:

Note: The first chart goes through 2009 since that’s when the decade ended. The second chart goes through 2010.

These numbers are not insubstantial in relation to unemployment. We have 13.1 million people unemployed now (FRED LNU03000000). If we had merely been running immigration at our historical average of 400,000 per year over the last two or three decades, unemployment wouldn’t even be an issue now.

Now, look back at the first chart. Look at the “1930” bar. It’s almost the smallest in history, right? During the Great Depression, the Roosevelt administration shut down immigration. It was just common sense; we didn’t have jobs for new people.

Why didn’t President Bush have that same common sense in 2008? And what’s President Obama’s excuse now?

Answer: during the 1930s, the USA was a nation of the people, by the people, and for the people. And today we are a nation of the corporations, by the corporations, and for the corporations.

Corporate profits benefit from mass immigration because the increased supply of labor drives down business “costs” – a.k.a. your paycheck.

Now, look at the decades when the mighty American Middle Class rose to power: the 1940s, 1950s, and 1960s were periods of low immigration. That isn’t a coincidence. Whether or not this nation has a middle class is a policy choice. Back then, we deliberately created a middle class beginning with the 1944 GI Bill.

Today, we have thrown the process in reverse. The vast wealth of the middle class is being converted into corporate profits via mass immigration, and wide-open free trade with low-wage nations that sucks entire industries out of the USA.

If the history books of the future are not written by corporate lobbyists (like our laws are today), the Great Recession will be recorded as the greatest betrayal of the American people in history.

Really, Commerce?

The U.S. Commerce Department says not to worry about offshoring. Everything’s cool. The only reason why the lightbulb factory where you used to work is now in Mexico is because there was demand in Mexico that had to be met. So the factory had to be moved. It had nothing to do with the fact that the new Mexican workers are only paid $2 per hour.

To which I ask: Really?

It’s impossible to ship lightbulbs to Mexico?

The entire American shoe industry was moved to China to supply the local market?

Factories were moved from Silicon Valley to Asia to make computers and gadgets for local consumption?

IBM shipped thousands of programming jobs to India to produce software for the Indian market?


Then why are there fleets of giant container ships bringing multinational products from Asia to the USA?

Why doesn’t Nike move some production from Asia to the USA to “supply the local demand”?

Because it’s all lies, of course. Orders were handed down to the Commerce Department economists to put lipstick on the offshoring pig. Without the massive profits from global labor arbitrage, how would corporate CEOs be able to justify their astronomical salaries?

But it’s not going to fool anybody. When people spend their unemployment checks, and food-stamp money at the dollar store, they see “Made in China” on just about everything. At least until all products are stamped: “Made in the World” which is an actual WTO effort underway right now.

That will fix everything.

Note: The Department of Commerce report was on the front page of the Wall Street Journal yesterday. Here’s the link.

Job-Creation Swamped by Immigration

Since March of 2010, the private sector has created jobs for 20 months in a row. The total comes to a modest 2,765,000. Our improving economy should make President Obama’s re-election a slam-dunk, right? Well, don’t be so sure because the president is also running a wide-open borders policy.

According to the most-recent statistics from the Department of Labor and the Department of Homeland security, jobs offshored are averaging 20,000 per month, and legal immigration 100,000 per month.

So, if we subtract jobs offshored, and legal immigration from jobs created, the 2,765,000 number from above gets whittled down to a grand total of 365,000. That’s a paltry 18,250 per-month average for this recovery. The red line on the chart below shows that we have only created a significant number of net jobs in four months of the recovery (click chart to enlarge):

Of course, the situation is much worse. The DOL stats don’t count all of the jobs offshored – only those reported by displaced workers seeking re-training funds. And illegal immigration and guest workers take a further toll on jobs.

The hard truth is that since the depths of the Great Recession, no progress has been made on net jobs for American citizens – you know, the people that vote in elections.

Note to Obama: It’s the sovereignty stupid!

Note: I used the Fed’s USPRIV data series for private-sector jobs. From 2005-2010, legal immigration has been over one million per year. The DOL reports offshoring stats with a long delay, but 2009 and 2010 were both well over 200,000 per year.

More Power to the Fed

I am not joking. While Fed-bashing may be all the rage, the fact is that the Fed is the only part of the federal government that is trying to DO something about unemployment, rather than just yapping about it.

Who has the world's largest bank vault door?

The Fed has been given a full-employment mandate by Congress. Full employment for the USA mind you; not China, Mexico, or India. However, Congress did not give the Fed sufficient powers to pursue this mandate. Trade policy, immigration policy, and currency exchange-rate policy all have huge impacts on unemployment, but the Fed has no say at all in those policies.

How is that possible?

When the Fed opened its doors in November 1914, the USA had a nationalist trade policy and a 17% tariff on imported goods. I suppose it was taken for granted that the country would always follow such a policy, and it was therefore not necessary to give the Fed any power over foreign affairs.

Today we have a 1% tariff, have lost entire industries to cheap imports, and our borders are virtually wide-open to mass immigration.

Observing the actions of the Congress, White House, and “Jobs Czar”, a visiting space alien would conclude that the USA was following a deliberate policy of high unemployment.

And that is exactly what is happening.

What would the Fed do if it had power over trade and immigration? I have no idea. But imagine that you are chairman of the Cleveland Fed. Your job is to make sure that the banking system runs smoothly, that checks don’t bounce, that savings are not wiped out in panics, etc. And you also research and report on the industry in your region, providing all kinds of important statistics for economists. Are you happy when you see yet another plant close down and head for Mexico?

What does the chairman of the Cleveland Fed think when he walks by his bank-vault door, which is the largest in the world? Do you think he is happy to watch his territory swirling down the economic drain of history?

My guess is that the Fed’s regional nature makes it more patriotic than the White House or Congress. Regional Fed presidents don’t go to Washington, after all. And since Fed Head’s don’t have to fund political campaigns, they don’t appear to be bribe-able. Beijing and the multinationals campaigned hard against QE2, and I wouldn’t be surprised if they offered huge bribes to the Fed. But Ben Bernanke and the Fed persevered against the pressure and threats, and made what they believed would be good policy for the USA and American citizens.

They should be rewarded for that.

The Fed should be given power over immigration. Maybe they should be able to declare a “jobs emergency” and call a temporary halt to all immigration. Maybe they should be given veto power over trade pacts, and the power to adjust dollar exchange rates with predatory nations such as China.

Now, I’m sure you are shouting at your monitor: “That’s would be totally unconstitutional!”.

But let me ask you this:

Was it constitutional when these powers were given over to the multinationals and their partners in Beijing?

I don’t think so.

The Empire Strikes Back at Texas Rebels

Did it strike you as odd when Ben Bernanke visited Fort Bliss in Texas today? At first glance, it was indeed odd. After all, central bankers usually give their speeches in front of a different type of audience.

But this was no typical speech. It was, in fact, a response to Texas Governor Rick “Oops” Perry who threatened to rough-up Bernanke if he ever came to Texas.

The Feds couldn’t just let such a threat pass unanswered. So today, they sent their own message to Perry: “If you want to mix it up, keep in mind that we already have military units stationed in your state, including the 1st Armored Division.”

Abrams Tank at Fort Bliss, Texas.

Maybe you think I’m exaggerating? But there is never a shortage of secessionist talk coming out of Texas. And such talk is becoming more and more credible as Mexico recolonizes Texas, and Texas integrates its economy more and more with Mexico. The emergence of a “Texican” nation on the USA’s southern border is a distinct possibility.

Now think of all the factories that we have sent to Mexico, and imagine Texico nationalizing them and retooling them for war production. Keep in mind that many soldiers died in Iraq because we couldn’t make enough steel to armor their Humvees against IEDs. The fact is that our wide-open “free trade” polices have dramatically degraded our industrial base and left us with questionable military capabilities. Texico could pose a credible military threat.

Geopolitical scientist George Friedman of STRATFOR, says that enemy forces positioned in Texas would be an intolerable threat to the USA. Texas is strategically located in the center of the continent and could project power in all directions. Consequently, Friedman says: “Texas ain’t going anywhere.”

And Bernanke’s seemingly innocuous trip to Fort Bliss today was subtle reminder to Governor Perry of that geopolitical reality.

Note: Perry’s massive Trans-Texas Corridor project would have dramatically increased economic ties with Mexico. It was shot down by the Federal Highway Administration last year.

It’s the Sovereignty Stupid!

In the 1950s, the USA’s shoe industry employed over 250,000 workers. Now, it’s gone – along with scores of other industries.

In 1950, the USA brought in 249,187 immigrants. In 2010, while suffering from Great-Depression style unemployment, four times as many immigrants were brought in. Over a million!

Factories have been offshored in order to increase the profits of multinational corporations. Shoes, and thousands of other products, are now made by barely-paid Asian sweatshop workers, as opposed to well-paid American workers. The multinationals pocket the difference.

Immigrants have been brought in to deliberately increase unemployment. Increasing the supply of labor reduces its cost. If you go to a job interview where you are the only applicant, you can ask for more money. But if there are twenty other applicants, then your bargaining power is drastically reduced, right?

Trade policy and immigration policy in the USA are optimized to maximize corporate profits by minimizing your paycheck. But it goes beyond that.

The USA is in a “currency union” with China. The purpose is to keep the dollar strong versus the yuan so that multinationals can purchase vast quantities of sweatshop labor at the lowest possible prices. This currency union is not voluntary. No agency of the US government agreed to it. The currency union is enforced by Beijing and its multinational partners, whose lobbyists make sure that any challenges in Congress are stamped out.

Part of the reason why our economic recovery is so weak is that the Chinese have bought up so many of the new dollars which the patriotic Federal Reserve Bank injected into the economy. Beijing has vetoed our monetary stimulus.

Of course, the multinational corporations who literally own the mainstream media will see to it that the presidential election is about minor issues such as taxes, regulation, debt, etc.

But who cares?

It’s the sovereignty stupid!

Note: Since the unemployment crises began, over one million legal immigrants have been brought in each year. That’s more than double our historical average of 400,000. See the official spreadsheet compiled by the diligent bureaucrats at DHS.

There’s a Sweatshop in Your Future – or Present – Part 2

Another Pennsylvania sweatshop.

Quiz: You are a warehouse manager for a multinational corporation, and it is hot outside – over a hundred degrees. It will cost you $200 to run the air-conditioner all day, or you could let your workers sweat in the heat and hire a paramedic to revive any that pass-out for $75. What is your decision?

Oh yeah, you have pregnant females on your staff.

If you decided to run the air conditioning, you failed. I regret to inform you that you are not corporate material. Maybe you would be happier in Cuba, being a communist. Don’t you know that there are billions of people in the world and pregnant women are a dime a dozen?,0,7937001,full.story

Amazon responds to complaints about poor working conditions in warehouses

NOW AMAZON IS FREEZING THEIR WAREHOUSE WORKERS!!! THIS IS UNBELIEVABLE!!! Is this some kind of diabolical NAZI medical experiment???:

Armageddon Averted

After the bell on Friday, the Chicago Mercantile Exchange issued an announcement about margin requirements. It was pretty vague. Nobody could decipher it. And then a great man came forward. Wielding space-alien-like intellectual powers, he read the announcement and issued a proclamation.

That man was “Tyler Durden” of Zero Edge.

What did he proclaim? That the mysterious message from the CME was a dramatic margin call on all futures contracts: stock futures, bond futures, currency futures, gold futures, pork bellies, number six heating oil, Bulgarian goat cheese, you name it.

In all, a $100 trillion global market meltdown would commence when the CME opened for business Sunday night.

As you can imagine, the Great Man’s people were baffled and confused. But “Durden” strode among them, reassuring one and all, that yes, the end was indeed near. No plaintive cry in the comments section was too insignificant for the great leader’s magnanimous attention.

And then the CME clarified the announcement. Turns out, it was no big deal. The futures opened on Sunday night flat as pancake.

“Tyler Durden” acts like he is privy to esoteric financial knowledge beyond the reach of mortal men. But this episode shows that he is just a loud-mouth knucklehead writing a glorified tabloid. And his readers are even dumber. Just about all of the idiots commenting on that post believed it! They believed that the CME had pulled the pin of a nuclear hand-grenade and then swallowed it!

What a spectacle of stupidity! Keep them coming “Durden”!

P.S. If the world does end today, it will only be a coincidence, and “Tyler Durden” will deserve no credit. When he was born, the doctor slapped his ass, and baby “Durden” shrieked “Armageddon!!!” And he’s been at it every since. Sort of a nuclear-powered “boy who cried wolf”.